Here's What the Future of Free Trade Looks Like

DORIE CLARK: Hello, this is Dorie Clark, and we are here as part of a Newsweek special series on creating the economy of the future. Today, our special guest is Wendy Cutler. She is the vice president of the Asia Society Policy Institute. And we are going to be talking about trade, about innovation, and about creating an economy that will work for everyone. Wendy, it's wonderful to have you here.

WENDY CUTLER: Well, thank you, Dorie. I'm pleased to be here.

CLARK: Thank you so much. And every Wednesday, during the month of February, we are part of this special series. It's sponsored by The Government of Japan, and we're digging into the issues of the future. So Wendy, the first question that I have for you, is actually about the massive supply chain disruptions that everyone has been facing and experiencing. It's incredibly frustrating. I mean, we've all in recent decades grown accustomed to a world where you order something if you can't get it tomorrow, you can certainly get it this week. Now all of a sudden basics, cars, furniture, people are having to wait weeks and even months. What is it that's going on? And how do issues of trade affect all of this? What's happening? And how can we make sense of it?

CUTLER: Well, that's a great question. And a few years ago, if you ask people about supply chains, no one would really know what you're talking about. And now it's front-page news.

And what's happening is, for a number of reasons, supply chains aren't working as smoothly as they used to. And there's a number of reasons for that. Number one is just the supply and demand situation. So during COVID, a lot of us are spending a lot of time at home. And we're spending a lot less time in restaurants and hotels and traveling. So as a result, we want to buy a lot more stuff, we want to buy more electronics, we're fixing our houses, we're setting up new rooms and redesigning old rooms. And all of that leads to a demand for goods. And those goods need to be shipped at a time when many of them come from overseas, if not the final good, many of the inputs. And you so you have a supply-demand mismatch.

When that's coupled with COVID illness and factory lockdowns, that means a lot of the folks can't even get to their factories to make these goods. So that leads to a backup. And then on top of that, you have logistics problems, because the same reasons ports have been closed, or ports have been backed up.

So when you put all of these elements together, we found ourselves in what we call kind of a supply chain crunch. Early on in the pandemic, it affected electronic products, it affected furniture, but then it moved to cars. Now you go to the supermarket, and they're empty shelves, at least in Washington, D.C. with respect to certain products. And frankly, you know, the question I always get is, when is this going to be over? I think this is going to be the new normal for a while. I think we're gonna have to get used to supply chain disruptions. But I think eventually we'll, we'll find that sweet spot again. But I think there will be shifts in supply chains as well, in response to all of these disruptions.

CLARK: That's interesting. Thank you, Wendy. We're here with Wendy Cutler. She's the vice president of the Asia Society Policy Institute. She's also a former U.S. trade negotiator. So we're glad to have her perspective.

Please feel free if you are tuning in and joining us to type into the chatbox and let us know who you are and where you're from. And if you have any questions for Wendy Cutler, we are part of a special Newsweek series on creating the economy of the future.

Now, Wendy, when it comes to these supply chain issues, I am curious, obviously, part of the issue here is we live in such a globalized economy, people are getting parts for different things that they're trying to assemble from all around the world. And that magnifies some of the challenges if there's a hiccup in one part of the supply chain.

Overall, what's your perspective? Were there certain countries that were actually winners in this whole supply chain mishegoss? Or, or basically, was everyone a loser in this situation? How did it shake out more broadly?

CUTLER: Well, it's too early to tell, frankly, because we don't have the data. But my sense is that countries like Vietnam, and many of its neighbors in Southeast Asia have benefited from some of these supply chain shifts. They put into place programs to attract investments that are that are either leaving China or investments that companies are looking to make in order to reduce their vulnerabilities and dependence on one model. Whether it be China or not.

And so when the data is available, and again, right now, it's just anecdotal, it does look like countries like Vietnam, Indonesia, Malaysia probably have benefited, but at the same time, you know, they've had tough times as well. Because again, COVID has led to many illnesses around the world. And right now, for example, the Delta variant is still rampant in Southeast Asia. And so, disruptions will be continuing. But I don't think it's a lose-lose situation, I think there will be some bright spots.

I also think that this is going to lead to further shifts in supply chains going forward. Because what it has revealed, is the dependence over-dependence on certain sources of supply. And as you mentioned, Dorie, you could have a car—10,000 parts—999 [9,999], you can get them, but you can't get that one part, that one bolt, that one widget and all of a sudden you can finalize that production. And so that has led companies to really look through not only those key parts, but also critical, but also parts that they didn't viewed as so critical. And they got spoiled, and they thought that they'll never be any disruptions.

So I think we're going to see shifting patterns continue. And that may benefit other countries in particular, outside of China. And frankly, it may even benefit countries like Mexico, as a number of countries—as the U.S. and others look to kind of regionalize their supply chains, and bring them either back to their borders, or, or very close to their borders.

CLARK: It's a really interesting point. We're here with Wendy Cutler, she's with the Asia Society Policy Institute, you can learn more about them at Asiasociety.org.

So Wendy, one of the calls that we hear regularly from certain politicians or, you know, just sort of a drumbeat over time is bring the jobs back to the U.S. Do you actually think that it is plausible, given the U.S. experience of this supply chain crisis, that we are going to go back to a world where some of these, you know, little tiny manifold parts are going to be built in the U.S.? Or do you feel like the future is going to look a little bit more like you were describing where maybe instead, it's a question of diversification amongst, say, Asian countries, or perhaps in Mexico, is it realistic to think that there will be more, you know, pieces of the supply chain manufactured in the U.S.?

CUTLER: Well, despite the calls for what's called reshoring, bringing that production back to the United States, or frankly, back to Japan or back to Korea, we're not going to be able to bring everything back. But I do think with respect to certain critical products, such as semiconductors or batteries, you're going to see more production being brought back to the United States or more incentives given to foreign direct investment within our borders.

I think this also pertains to what I would call essential materials. And here I'd put, you know, a lot of the health care products, right? We discovered during COVID, that we were over-dependent on China, for PPE. We were overly dependent on India for other pharmaceuticals. And that's kind of revealed a number of these like vulnerabilities. And so I think you're gonna see selective incentives to re-shore.

But at the end of the day, a lot of these decisions are made by private companies. And the question is—are they—is this going to be economical for them? Or is this going to be in their interest to bring the production home? And, frankly, in a lot of these product areas, if we were to make everything within the U.S. borders, the prices for consumers would go up considerably, at a time when we're already experiencing high inflation rates. So I don't think it's feasible. But I think you're going to see kind of what I would call selective reshoring of certain critical and essential products.

CLARK: That makes a lot of sense. And as a result of these disruptions that we've seen, have there been laws passed? Or do you anticipate laws being passed? Whether it's in the United States or around the world with regard to trade policies? Is there going to be a wave of perhaps even mandates about how to think about trade? So the critical items don't experience these shortages?

CUTLER: Well, not mandates, I think more incentives. For example, in the United States, we're already rewriting our government procurement rules. Meaning we're giving incentives to companies that produce in the United States and have more U.S. value in their products. We're making them eligible for greater price preferential. So that's one area. But I think it's about providing incentives.

You know, we have now a bill pending in the Congress to get $52 billion for our, to our semiconductor industry, largely to build new fabrication plants in the United States. And so these incentives will lead companies to decide that, hmm, maybe we should come back that when they lock when they look at the cost, price and the cost-benefit analysis, and they also look at risk mitigation and lessening their vulnerabilities, they will make that choice. I think Japan has certain programs, as well, they put money towards encouraging certain of their companies to come back to Japan. Korea has done the same. And we may see others kind of follow that route as well.

CLARK: Yeah, thank you very much. We're here with Wendy Cutler. She is with the Asia Society Policy Institute. Wendy, I'm curious. We've been talking a bit about China, which of course is a huge player in terms of global supply chain manufacturing. Can you talk a little bit about, I'm curious, if you could talk a little bit—certainly, Donald Trump during his presidency made China and toughness on China, a key centerpiece of some of the things that he was talking about. Can you talk a little bit about the Trump administration and the Biden administration with regard to how they are thinking about trade with China and the similarities or differences that you have observed?

CUTLER: Yeah, and there are similarities, but they're also important differences. I've read a number of reports suggesting Biden's just following the Trump trade policies. And I just don't agree with that. I don't think that's accurate.

I do think, though, that there is kind of a unified view in the United States and a bipartisan view that we need to really rethink our relationship with China. We need to be realistic when we look at where they're headed. And as a result, we need to rebuild our competitiveness at home. We need to work with our allies and partners to collectively respond to some of the challenges that China brings to the global economy. And where needed, we need to take actions against China. And so that's kind of the policy of the Biden administration. And the administration is putting such an important emphasis on working with allies and partners.

And, this differs from the Trump go it alone approach. I think what Trump was thinking that we can force China to change by making their current practices too expensive by putting in tariffs. And that policy didn't work. Because did China cave? No. What China did is responded with its own tariffs. And so now we're left with tariffs on over $300 billion worth of imports into the United States.

But what's interesting for me trade between the U.S. and China continues. And in fact, Chinese exports to the United States this past year, we're at record levels. Again, a lot of that having to do with U.S. demand shifts during COVID. But I also think it underscores our economies are interconnected. So that was one important difference.

I also think the Biden administration is reviewing our trade relationship with China as one part of our overall relationship with China. For Trump, the trade relationship was really the driving feature of our overall relationship. And I think now a more strategic view towards China, which includes a trade component, but it's not driven by trade considerations is in place now.

CLARK: That's really interesting. Thank you. We're here with Wendy Cutler. She's a former U.S. trade negotiator, now vice president at the Asia Society Policy Institute. We're talking about creating the economy of the future. We want to welcome some of the great friends who are tuning in including—we have Sushma, who's here from India, joining us and many more. We're very glad to have you and feel free to type in any questions you have for Wendy as we talk about economic policy, free trade and more.

Now, Wendy, one thing I'm curious about, we've been talking about a variety of different countries, I'd love to zero in on one of our other large trading partners, which is Japan. Can you talk a little bit about what you see as the biggest issues facing U.S. and Japanese trade relations in the current climate?

CUTLER: Well, you know, it's interesting, I spent many years of my career at the U.S. government, negotiating trade agreements with Japan, primarily doing during the trade war days, but also during the Trans-Pacific Partnership negotiations. I remember when relations were trade relations were so tense between the United States and Japan. And by the time I left the government in 2015, our trade relations could not have been closer. When Japan joined the TPP negotiations, they really became such a close partner of the United States in terms of helping to push a high-standards agreement. Regrettably, we left the agreement. But Japan not only stayed in the agreement but then marshaled all the other countries to conclude the agreement without us. And frankly, with most of the agreement intact, very few provisions were suspended. And all the market access commitments remained.

So I have enormous respect for what, you know, the role Japan played. And that in fact, now when you look at our trade relationship with Japan—look, there's some, you know, there's some sectoral problems—whether it be in financial services or pharmaceuticals, but that will always be the case with any two large trading partners, you're always going to friction somewhere. But that doesn't define our trade relationship at all.

In fact, I think we see eye to eye on many trade and trade-related issues, whether it be issues related to supply chains, or working to address China challenges, working and pushing for WTO reform—we really see eye to eye with Japan. We're very close partners in the economic area, as well as our overall strong alliance.

CLARK: Absolutely. So let's talk for a minute about some of the smaller and less developed economies, Wendy. Obviously, the pandemic and the pandemic itself, and also the supply chain disruptions effectuated by the pandemic have impacted a lot of developing economies, in oftentimes negative ways.

Can you talk a little bit about what the scenario is on the ground in some of these countries, and also perhaps, what larger economies might do to help in some way or to rectify some of these imbalances?

CUTLER: Look, it's really a mixed picture. Before we had vaccines, there was a lot of, you know, everyone was trying to deal with lockdowns and economic downturns, both developed and developing countries. Once the Western world got vaccines, we kept those largely to ourselves. We weren't generous enough. But over time now, the United States and other countries have been shipping vaccines to developing countries. I mean, we all know in our, in our, in our minds, we all know that this, this pandemic will not be over until the whole world is vaccinated. But at the same time, look, national governments are under intense pressure to take care of their own citizens first, and not be that global citizen first. So many developing countries were slow to get the vaccines blamed the United States and other countries for not being generous enough. But I think now that that kind of concern is really beginning to subside, and at least vaccines are being made available, distribution channels and production, manufacturing facilities are being improved. And, vaccines are becoming more available.

The other economic impacts of COVID of lockdowns, of the shutting of factories and all of that, that also disproportionately hit many developing countries. And I think many of them are still trying to recover and when you look at growth rates globally last year—they were pretty low. And, we're seeing that beginning to turn around—they largely are depending on stimulus and other kinds of government programs in the developed world to, kind of, help them lift them out of their economic doldrums. So the pandemic has resulted in a lot of disproportional hurt. But hopefully, we're kind of over—we're getting back in a better place. But I think it's raised a lot of questions about, you know, the lessons learned from this pandemic.

One of the trade lessons learned is that countries, including the United States, and Europe, in particular, were very quick to put in export restrictions on medical equipment, on medical supplies, and ultimately vaccines. And the WTO doesn't prohibit export restrictions. But it does set up a bunch of rules to try and discourage them. But those rules weren't followed. And I think looking ahead, that's an area that I think is going to require the global trading community to give further thought to. Because withholding those types of supplies and related products and medicines is not the way the global community should respond to a pandemic.

CLARK: Indeed, yes, thank you. We're here with Wendy Cutler. She's vice president at the Asia Society Policy Institute, a former U.S. trade negotiator, and we're here discussing how to create the economy of the future. What does it look like? What should it look like?

And Wendy, one of the biggest trends that we've been seeing in recent years around the world really, is a rise of nationalistic movements. And many of them are opposed to free trade. They're opposing globalization. I'm curious, what are your thoughts about what is giving rise to this phenomenon? And is it actually a problem? Should we be concerned? Or if there were some countries that said, you know, no, no more, we're gonna step out of this global economy thing, we don't want free trade? What would happen? Is this actually a big deal that everyone should be concerned about or not so much?

CUTLER: Well, the United States has had a big rethink about trade. And for the years, I was working on trade, at the office of the U.S. Trade Representative, whether I work for Republicans or Democrats, it was largely the same policy that was being pursued. And that was that trade liberalization and opening markets was in the U.S. interest. It would help grow our economy, and it would help our trading partners grow their economy and develop their economies, and therefore it was a win-win situation. But over the years, that philosophy is not as strong as it used to be. And many concerns were increasingly raised during my last 10 years at USTR in particular, that these trade agreements just weren't benefiting the U.S. middle class. That the U.S. middle class was kind of falling behind. These trade agreements helped to grow trade, but they exacerbated income inequality in the United States. And that burden fell at the shoulders largely of the U.S. middle class.

Leading up to the Biden administration, I participated in a study with some current Biden, administration officials called a foreign policy for the U.S. or U.S. foreign policy for the middle class. And we looked at a lot of these issues, not just trade, but just in general, where does the U.S. middle class, what does it think about our foreign policy, our trade policy?

And I think it revealed many valid concerns. But it also suggested that our middle class is very supportive of international engagement. They don't want to withdraw from the world. But they want to make sure that trade is fair, that there's a level playing field, and that all countries, particularly China, you know, play by the rules. And the Biden administration has kind of, let's just say, has been reluctant to pursue new trade agreements with the view that we need to really take care of pressing domestic concerns first. We need to rebuild our competitiveness. And when we do start pursuing trade initiatives, we need to ensure that they look different. And, that in particular, they promote labor and worker standards that they promote equity in the societies globally. And that they promote the strengthening of environmental protections. And so our trade policy is changing.

My view is that there are valid concerns that need to be addressed. But my concern is that we may be moving too far to one side of the pendulum, and that not all trade liberalization is bad and not all trade liberalization works against U.S. interest. We need to find that balance. And in my view, we're not there yet.

CLARK: Yeah, thank you for that. This is Dorie Clark, on behalf of Newsweek, we are here talking about creating the economy of the future every Wednesday during the month of February. We are here at 12:30 pm Eastern 9:30 am Pacific, talking about various aspects of what the world economy will look like and should look like in the future. Our guest is Wendy Cutler, of the Asia Society Policy Institute. You can learn more at Asiasociety.org.

Now, Wendy, a moment ago, you were talking about a fair playing field. One of the topics that you've written about in the past is called trade coercion, which obviously does not sound good. Can you talk to us a little bit about what trade coercion is and why it's a problem? And also what can we do about it?

CUTLER: Yeah, and that's a great question. And when I look to the future, this is one of those practices, trade coercive practices that concerns me, and really has the potential if left unchecked, to weaken the global trading system. And in short, what this refers to are practices by certain countries that lead them to restrict imports or take other economic restrictive policies in response to foreign policy concerns.

So for example, Australia, which was very vocal a few years ago, calling for WTO investigation of the origins of COVID. Let's just say this call was not met with enthusiasm in China. And as a result of this policy move by Australia, as well as some other steps they took, China chose to restrict access to their market for Australian exports of a variety of products, including wine, barley, coal, meat, and the list goes on and on. And these restrictions remain in place. And it's very difficult to respond to these restrictions, when many of them at least, you know, are kind of what I call them, the gray area, where China has some plausible deniability. And when the WTO dispute settlement system is just not working the way it should.

We're now saying that this practice has now spread to Lithuanian imports, and even beyond that to any EU exports that incorporate Lithuanian parts. And so now the European Union is taking a WTO dispute settlement case against China, calling these practices illegal under the WTO framework. But while I think the WTO is a useful area to try and pursue these grievances, I think it's important that countries kind of band together and collectively tell China or frankly, any other country that tries this practice, that this is unacceptable, it's unfair, and to actually come up with some punishment towards that country on a collective basis. We're not there yet. Countries are comfortable being vocally, you know, vocally showing solidarity with a country that's being hit. But in terms of taking really concrete actions, like not letting Chinese imports in as a result, or somehow letting those products from the country that's being hit into their countries, it just gets more complicated. But I think this is a practice that, again, if the global community doesn't collectively respond to, then China and other countries will get the message, guess what this is okay. And we're going to continue using trade-restrictive practices in order to get what we want on the foreign policy front.

CLARK: Yeah, that is a real challenge. Another challenge, Wendy, that I think might be on a lot of people's minds is obviously there, there are many benefits to free trade across the globe. One thing that is clearly not a benefit if goods are traveling over long distances, is the impact on the climate.

Can you talk a little bit more about free trade and how this factors in with the climate change goals that many countries are setting trying to meet? How can free trade coexist with some of the new imperatives that countries are trying to live by?

CUTLER: And that's such a topical issue for our topic today, creating the economy of the future. Because frankly, all of these environmental and climate considerations are going to need to be factored into trade policies. We don't have the answers yet. Europe, for example, has come forward with what's called in the trade world a proposal for a CBAM, a carbon border adjustment measure, which would basically allow it to impose tariffs on imports that are carbon-intensive. If Europe does this unilaterally and puts this policy in place, you could see how it could be abused and could be viewed by others as a protectionist policy.

And so it's so important that the global trading community comes together and tries to set these rules together. But as we've seen, in any climate change talks, there's a huge gap between what developed countries are ready to do and what developing countries don't want to do until the developed countries do more. And so this is a huge challenge, but it's something we're going to have to address. I think, over time, what we will see is more regionalization of trade because the long distances are going to result, you know, they just use, you know, more energies needed to move to ship the products. And so that could make your neighbors more attractive sources of supply.

Also, I think there will be a real push in certain industries, particularly like steel, aluminum and others to reduce their carbon intensity and use new manufacturing methods that don't burn so many fossil fuels. But when I look to the future and look where the rules—the important rules that need to be developed, the whole environment, climate space is just ripe for international discussion. But again, this will not be easy and particularly given the divide between the developed and the developing world.

CLARK: Yes, absolutely. It is a big challenge. We're here with Wendy Cutler. She's the vice president at the Asia Society Policy Institute, you can learn more about their work at Asiasociety.org. And we are here as part of a special series for the month of February, sponsored by Newsweek and presented by the government of Japan, talking about creating the economy of the future. It's every Wednesday at 12:30 Eastern, 9:30 Pacific.

Now, Wendy, one of the biggest factors that has really reshaped the landscape of commerce, in many aspects of free trade is the shift in recent years, to having so much of the consumer purchasing experience be done through e-commerce rather than going to stores rather than people, you know, buying the thing locally. They're getting it with a click, and it may be shipped from around the world, but e-commerce is a huge factor in how they are actually transacting that business. Can you talk a little bit about the rise of e-commerce and how it may be affecting global trade and also supply chain issues?

CUTLER: Well, you're right Dorie, like we're just saying—just a huge shift away from the bricks and mortar stores to e-commerce. And that's not just in, you know, domestically, it's internationally. So it's really kind of reshaping the way trade is conducted. In trade agreements, more and more, you'll see what are called e-commerce chapters, or digital trade chapters, or even just standalone digital trade or digital economy agreements that are trying to set the rules for e-commerce trade—to make sure that data can flow freely between countries to ensure that countries don't require that data be stored in the country to ensure that e-commerce can move quickly and without barriers, including tariff barriers between countries. And the list goes on and on.

And as more and more trade is conducted digitally. This is you know, when we look to the economy of the future, this is another area in addition to climate, where new rules are needed. The WTO as conducting e-commerce negotiations, it's hard to imagine that there are no rules in the WTO, the global trading organization for e-commerce trade as of today. E-commerce has been around for a long time and so what countries have chosen to do is to just work with other like-minded countries to set up the rules between them with respect to digital trade. And this is, again, it's going to be an increasingly important area of any trade agreement and any trade arrangements going forward.

The United States is about to unveil a new Indo-Pacific economic framework, which will define our scope for economic engagement in the important Indo-Pacific region. And one of the most important features of this framework will be rules and suggested cooperation on digital economy matters. And so this is issues kind of front and center, globally. And I think there's a real sense that we need rules. Now, the challenge here is the kind of rules that the United States and its partners and allies would like to set up with respect to e-commerce fly in the face of the type of regime that China's seeking, where it's seeking to impose many restrictions on the use, and the storage of data, and on the ability of its e-commerce and other digital companies to operate freely. And so while there are some commonalities with respect to wanting to facilitate e-commerce trade, there are many challenges here, here as well.

CLARK: Yeah, that's a very useful observation. Thank you, Wendy. Wendy Cutler, former U.S. Trade Representative now with the Asia Society Policy Institute.

Wendy, one of the other areas of specialization that you focus on is women's empowerment in Asia. And I'm hoping you can talk a little bit about that, and how that factors into the economic issues that you study.

CUTLER: Yeah, so my interest in this topic really, was rooted in a lot of trade negotiations I was involved in with Asian counterparts, particularly Japan and Korea. You know, in the 90s, and 2000s, where I would be like the only woman in the room, and I'd look across the table, and particularly my Asian counterparts—I saw a lot of guys, and not a lot of women.

But that's changing. And so one of the things that I really feel passionately about, is to try and help these women gain the skills necessary, not only with respect to how to have had to understand trade, and how to pursue trade policy but also how to advance in the workplace as a woman in very male-dominated societies. And I'm doing some great programs with young women across the board in Asia, and I'm learning so much. And I, I think that in 10 years, you're gonna, you may even see more women in the room than men. And that's very encouraging.

You know, also, when I think of the impact of COVID on women, and women's employment, a lot of people are focusing on the negatives, right? That women during COVID, many had to leave the workforce, because they needed to take care of their kids' education at home, that elderly parent care. They couldn't keep up with all the demands and subsequently left the workforce. In addition, many women who worked in the services sector, as we discussed earlier, found that either they're expected to go into work even when COVID was rampant, and they don't want to do that. Or, that their jobs were eliminated. And so there are negative aspects of COVID. But I'm hoping that one kind of bright light going forward for women's employment will be the kind of the acceptance now of telecommuting, and being able to do your work electronically, because that provides so much more flexibility, which is so key to, particularly for women who—where a lot of the housekeeping, child-rearing and elderly care burdens fall on them. So it will be interesting to see. I know in Japan, they're moving forward in this area, and some companies have been pretty supportive of working at home, working virtually. It will be interesting to see if this acceptance and this flexibility continues when we kind of either get over COVID, or you know, at least are in a better place with respect to COVID.

But I'm hoping it will because, you know, it's just critical. We all need flexibility at work. We're seeing that in the United States across the board. And again, women were hit hard by COVID in the workplace, but maybe going forward in the longer term, there will be these kinds of benefits that will help them remain in the workforce. And frankly, for a country like Japan, they need these women to stay in the workforce. And it's not enough to just get women at entry-level to come into these jobs. I mean, one of the key challenges for Japan is retaining women in the workplace once they start having families. And, you know, I think Japanese officials need to deal with that. I don't think it's just a problem for the government. I think that corporations and private sector firms have a lot to contribute here as well, as well as a lot of the cultural norms just need to change.

But with the demographic challenges that countries like Japan and Korea, and now even China are facing, the women's role in the workplace is going to become more and more important. And if the environment is not improved, and the flexibility isn't increased, I think they're going to have a huge challenge retaining women in the workforce.

CLARK: Yes, women's participation in the labor market is certainly a crucial issue. So thank you for touching on that, Wendy. And I'm curious as a last question for you. And again, we've been here with Wendy Cutler, she is with the Asia Society Policy Institute. She's a former U.S. Trade Representative. If we were empowering you, Wendy, with a magic wand. And you were able to single-handedly address what you think is the biggest issue in trade right now? What would it be? What problem would you solve? How, how would you fix things to improve the world?

CUTLER: I think the biggest challenge right now, and the one that worries me the most about the future of the trading system is the behavior of non-market economies, particularly China. I think they have a completely different system with a lot of state support and a lot of government direction. And that kind of clashes with, you know, the free trade or the multilateral trading system. And unfortunately, the rules were locked in, before these practices became prevalent. And so it's so hard to change these rules, because China's happy with the status quo. They're getting the benefits, and yet, they're not having to—let's just say a lot of their trade-distorting practices aren't being disciplined.

And so how we get around that is just, it's very challenging. And I think that is going to lead to we're already seeing it in the United States, but I think was spread to other countries as well is how can you support this global trading system when some countries are playing by the rules? And the others? Yeah, they may be playing by most of the rules, but the rules don't even address their problems or their challenges they're bringing to the trading system.

So, you know, that's the one that kind of keeps me up at night, because I don't know what the solution is here. And I think that impacts the ability of us to work with China, to set up rules to govern supply chains, export restrictions, environmental, you know, considerations, and you know, some of the other issues of the future like digital trade that we've been discussing.

CLARK: Really important observation. Thank you so much.

CUTLER: That's a pretty down note to conclude on.

CLARK: Well, let's, let's conclude on it up one. Wendy, what are you most encouraged by in the world of trade right now? Is there a bright light? Is there something you feel like is a positive development?

CUTLER: You know the positive development for me is that even with all these problems, countries continue to trade a lot. And even during COVID, when you look at the trade flows between countries, and not just the U.S. and China, but just across the board, trade is—the trade volumes are increasing. Companies are finding ways to trade even if they think their governments aren't doing such a great job. So there must be something right about it. It's going to be with us forever. Not everyone's just closing their borders. So, you know, that's, I think, a bright spot.

CLARK: Trade absolutely continues. That's wonderful. Wendy Cutler. She's with the Asia Society Policy Institute. You can learn more at Asiasociety.org. We've been talking about creating the economy of the future. It's a special series put on by Newsweek. It is every Wednesday during the month of February at 12:30 pm Eastern, 9:30 Pacific. Tune in next Wednesday, we're going to be talking about the future of the economy and climate change. Wendy Cutler, thank you so much for joining us.

CUTLER: Well, thank you Dorie. It's been my pleasure. Thank you.